Monday, January 20, 2014

Church of England appoints big hitter to battle loan sharks

Hector Sants, Britain’s former top financial industry regulator
who resigned from Barclays due to stress, will lead a new financial
taskforce set up by the Church of England as part of its campaign
against controversial payday lenders.The church said on Thursday
that Sants had accepted an invitation from Archbishop of Canterbury
Justin Welby to chair the body, called the Task Group on Credit Unions
and the Financial Sector.

Welby has pledged to drive Britain’s
payday lenders out of business by supporting credit unions as an
alternative to their high-interest loans intended to tide borrowers over
until the next pay packet.

Payday lenders such as Wonga, which
charges annual interest rates of 5,853 percent, argue that they fill a
gap in the market created by high-street banks retreating from riskier
lending and say their loans are meant to be repaid within a month, which
incurs lower interest charges.

The taskforce will support credit
unions and work with the wider UK financial sector to build support for
community-based financial services and encourage responsible lending
and saving.

“I have long recognized that the banking sector requires cultural change,” Sants said in a statement.

Sants,
58, ran Britain’s Financial Services Authority (FSA) through the
financial crisis and joined Barclays at the start of 2013. He was placed
on sick leave in October and left the bank a month later after deciding
he would not be able to return to work in the short term. His new
position is unpaid and will take up about one day a month, the church
said.